I am a CPA in Texas with an MBA from the University of Chicago. I have seen a lot and made many mistakes. Hopefully by now I will have learned something from them. Just as importantly, you may learn something from my mistakes. You can e-mail me by clicking on my "View my complete profile".

Tuesday, November 25, 2008

Ben Franklin-2

My 6 November 2008 post, "Ben Franklin Was Right", http://skepticaltexascpa.blogspot.com/2008/11/ben-franklin-was-right.html, apparently ruffled some high-placed feathers. It attracted a record number of: "reads" for a Skeptical CPA post, 2,174 and comments, 22. IA may have joined Pat Buchanan's "peasants with pitchforks" brigade. If not, sign me up Pat. Teresa Ghilarducci's (TG) plan to end 401(k) plans as we know them is public record. Rush Limbaugh (Rush), with about 20 million weekly listeners discussed it! Mark Levin's (ML) 16-minute interview is a gem. Listen to it. It seems our learned professor spent too long in the academy and is not used to being cross examined by a clear intellectual better who is not dependent upon her for a grade! Enjoy, have some laughs at a "hackademic's" expense. ML has about 2.5 million weekly listeners.

Reuters 5 November 2008 article quotes TG as saying, George Miller "wants to make 401(k)s better. He doesn't want to kill the tax deduction. In my favor, he agrees I brought up genuinely credible criticisms of the 401(k) tax break as it exists now". The link: http://www.reuters.com/articlePrint?articleId=USTRE4A49UV20081105. Isn't this dandy? Miller doesn't want to "kill the tax deduction" now. Wait until next year as New York Mets fans used to say. Did Miller get more flak over this than he anticipated and will wait to introduce a bill to kill the 401(k) tax deduction next year? What makes TG's plan transparent is: anyone who wants to put Treasury paper, either conventional or TIPS in his 401(k) can do sonow. TG's plan is: seize your 401(k) assets and give you a piece of Uncle Sam's paper which he will hyperinflate out of existence at his leisure.

The Los Angeles Times, 9 November 2008, article by James Rainey (JR) attacked "El Rushbo" for his attack on Obama. JR in my opinion, is a left-wing Obamacon, economic ignoramus, who is incapable of making an argument, only ad hominem attacks. The relevant portion of JR's article, "In a time when the nation calls out for cool leadership and rational discussion, Limbaugh stirs the cauldron, a tendency he proved in a particularly grotesque way last week when he accused Obama's party of plotting a government takeover of 401(k) plans. 'They're going to take your 401(k), put it in the Social Security trust fund, whatever the hell that is,' Limbaugh woofed. 'Trust fund, my rear end.' A slight problem with Limbaugh's report: Obama and the Democrats have proposed no such thing. The proposal, in fact, emanated from a single economist, one of many experts testifying to a congressional committee. ... To broadcast such a report--so drained of context as to constitute a lie--would be a shameless act at any time. But Limbaugh needlessly stirred the fears of millions he holds in his thrall--making the 401(k) thievery sound like a done deal. Shameless", my emphasis. Link: http://www.latimes.com/news/politics/la-na-onthemedia9-2008nov09,0,4216330.story. JR, didn't the Democrats have TG testify to fly their trial balloon? What do you think happened with say, 1996's Boskin Commission? Coincidence, I don't think so.

I followed about a dozen blog posts which described TG's plan. The majority referred back to the Workforce article I mentioned on 6 November.

Anonymous', 7 November 2008 comment launched this post, "I'm a constituent of Congressman Jim McDermott's, and I got in touch with his office after reading this. They told me in no uncertain terms that this is a false story, that Congressman McDermott is considering no such proposal, and that the 'quotes' from Congressman McDermott in various versions of this story are fabrications. If you'd like to check with his office and verify this yourself, you can reach them at: 206-553-7170. I look forward to seeing a prominent correction". Well anonymous, you ain't gettin' it. Who do you think you are? Dostoyevsky's Grand Inquisitor? I realize my posts are legal hearsay since I am not an "ear" witness to McDermott's statements. However, he never had any publication they appeared in retract them. What will you, yes you anonymous, do about it? Who did you speak to in McDermott's office? I offer McDermott a deal. If he flies here to Houston, at his expense, I will depose him and pay for the court reporter then post a deposition transcript at this blog. Let the readers decide who's lying and when.

"All of the issues the foes on Capitol Hill are considering are very troubling, especially Rep. George Miller's even considering the government's taking over 401(k)s. Are we in Argentina?", Thomas Edwards letter to the WSJ, 13 November 2008.

"You may have heard about Argentina's plan to nationalize private retirement accounts. Some Democrats on Capitol Hill are inspired, and with their big election victory they may get the chance to test Peronist ideas in America. Meet Congressmen George Miller and Jim McDermott, who are eager to change the way Americans save for their golden years. ... Before Election Day, the Congressmen began to target the $3 trillion in 401(k) accounts held by 60% of Americans. Mr. Miller called the system 'an inadequate vehicle' that has not been terribly sucessful' in encouraging retirement savings. He wants a 'wholesale re-examination' of pensions. ... But the Chairman has also signalled greater ambitions. At a hearing last month, Mr. Miller put the 401(k) system into play. Under the current system, employers match employee contributions that aren't taxed until redeemed, an indirect subsidy worth some $80 billion today. 'We have to start to think about in Congress ... whether or not we want to continue to invest that $80 billion for a policy that's not generating what we now say it should,' Mr. Miller said. 'For a taxpayer investment of this size, we must ensure that the structure of 401(k)s adequately protects the nest eggs of participating workers.' ... Most eye-catching was an idea from Teresa Ghilarducci at New York's New School for Social Research. ... A McDermott spokesman called her proposals 'intriguing' and 'part of the discussion.' Mr. Miller hasn't so far endorsed the plan. ... Anger over the drop in 401(k) balances is one reason that voters who belong to the 'investor class' swung to Democrats in greater than usual numbers this year. Their mandate is for policies that improve those returns, not strip them of tax benefits", Editorial at the WSJ, 14 November 2008.

"Allow me to repeat my position on 401(k)s, which you mischaraterize in your Nov. 6 'Obama's Real Opposition' and Nov. 14 'Targeting Your 401(k)' editorials. I do not support abolishing 401(k)s, forcing these plans into government programs, or changing their tax status. We must preserve and strengthen 401(k)s, not end them. ... That is why I support strong fee disclosure and other measures to increase participation in 401(k) plans", George Miller letter to the WSJ, 18 November 2008.

On 13 November 2008 I went to Jim McDermott's (JM) website and did not find any mention of TG's plan. I did find that JM voted against the bailout bill. Thank you JM for that.

Yes, Edwards, we are in Argentina. Hyperinflation is coming!

In reading the WSJ's editorial I anticipated the words as I read them. Had the WSJ asked me, I could have written it as an op-ed.

This is what you say now Rep. Miller. Why did TG testify at your hearings? When will you tell us "circumstances have changed. We must nationalize your 401(k)s for the public good"? This looks like setting up Joe Schmoe for the coming nationalization.

At Skeptical CPA we are not afraid to draw conclusions from facts. IA surmises after Obama was elected someone in the "Office of the President-Elect" became aware of this proposal floating around Congress. This Obamacon, whoever he is, told Miller, McDermott and anyone else pushing it something to the effect, "Obama got about 80% of Wall Street's campaign contributions. Do you realize that even at 50 basis points a year, with $3 trillion in 401(k)s, to adopt Ghillarducci's plan would take $15 billion a year from Obama's constituents? Do you understand that?" And now the TG plan pushers are running from their own Frankenstein monster. At least that's how it looks from here.